Claremont Council Blindsided by Tax Abatement

Questions have arisen over a decision to abate more than $200,000 in back taxes on the Topstone Mill building at the corner of Mulberry Street and Park Avenue in Claremont, N.H. The City Council will hold a special meeting next week to discuss the matter. (Valley News - August Frank) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

Claremont — The City Council will hold a special meeting on Wednesday to discuss the recent decision by the city’s contracted assessor to abate more than $200,000 in back taxes on a Mulberry Street property that the city had refused to take for back taxes because of contamination issues.

Councilors were apparently not aware of the abatement decision signed by Joseph Lessard, an employee of Municipal Resources Inc. The Topstone Mill building’s tenants include a bar run by City Councilor Nick Koloski.

The abatement first was reported this week by former City Councilor Jim Sullivan on his website, the Sullivan Report. Sullivan said he was alerted by state Rep. Francis Gauthier, R-Claremont, who he said discovered the reduction in taxes to $14,450 from about $220,000 on the city’s website, where the information on taxes due and paid is available.

On Thursday, City Clerk Gwen Melcher confirmed that her office received the abatement, signed by Lessard, on tax bills going back several years on Aug. 24. Melcher said the owners of Topstone now owe $7,149 each for the first two quarters of 2018.

Topstone Holdings LLC bought the five-story brick building, a former shoe factory built in 1901, in 2006 for $495,000. It currently is assessed at $670,000.

The 25-page abatement application was filed in February 2017 and the top page says the year being appealed is 2016. Judy Nesset, of Nashua, N.H., the representative for the owners on the abatement request, argued the value should be reduced to $125,000.

Nesset said given the contamination issues, which prevent the owners from finding new tenants, the absence of heat on the upper floors and roof leaks on the fifth floor, only the bottom can be occupied at this time.

“The range of values is between $55,010 and $219,331,” Nesset wrote. “The logical value would be somewhere in the middle at $125,000.”

City Manager Ryan McNutt said the city followed the process it normally does when an abatement request is submitted.

“There was nothing done here that we haven’t done in past year or past 10 years,” he said.

In an email, McNutt further explained the decision.

“Governments generally agree to abate or reduce the taxes of businesses and other taxpayers to promote economic development, job growth, redevelopment of blighted or underdeveloped areas, and other actions that are beneficial to the government or its citizens,” McNutt said.

However, the decision means taxes owed prior to 2016 also were abated. Lessard was unavailable for comment on Thursday.

The manager of Topstone Holdings is Frederic Lowen, of Hinesburg, Vt. Its registered agent is Barry Schuster, a Lebanon-based attorney whose clients include several commercial property owners. Efforts to reach Lowen for comment through Schuster were unsuccessful on Thursday.

At Wednesday’s City Council meeting, resident Joe Osgood told the council that he and lot of other residents were “irritated” to learn that abatement was granted apparently without the council’s knowledge or approval.

“That bothers me,” said Osgood, a former state representative.

Osgood said if there is a provision that allows tax abatement without council approval, it needs to be changed.

“When my money is given away, I would prefer my officials know about it,” Osgood said. “I would like to know how this happened as a voting member of the city.”

There is no requirement in the city charter that the council approve or be officially informed of abatement decisions.

When the council discussed a date for the special meeting, council member Scott Pope, who agreed a meeting was needed, was upfront about why he thinks it is being scheduled to discuss a single property, something he said the council does not normally do.

“It is just politics,” Pope said, alluding to claims by Sullivan that the council is unwilling to take the property for back taxes because Koloski, their colleague, is a tenant, with a restaurant, the Time-Out Americana Grill, on a portion of the first floor.

“I think this has come to a head because of politics,” Pope said.

But Mayor Charlene Lovett said the issue can be a “catalyst” and an opportunity for the council to better educate itself about the process of assessments and abatements. She said the council only learned about the abatement a day ago and there was not time to place the item on the agenda. A special meeting will “ensure” that all the facts are presented and there can be a complete accounting of what happened and why, she said.

“The way this unfolded tells me we have issues with the processes and they need to be improved,” Lovett said.

Koloski, who recused himself from the council discussion, as he has done previously with the Topstone property, said in an interview on Thursday he has not discussed the situation with the owners or other councilors and was not aware of the abatement prior to Wednesday’s meeting. But he is looking forward to a public airing of the issue.

“I am happy we are having a public discussion because I have a list of questions,” Koloski said.

As for suggestions the owners are getting preferential treatment because he is a tenant, Koloski said it simply is not true.

“It is concerning,” he said. “I think anybody would be irritated when someone cast doubt on who they are as a person. From the get-go, I have done the right thing. Anything I have done, I own it.”

Assistant Mayor Allen Damren, who also asked that the city’s legal counsel be present at the meeting, which will include Lessard, said that because the property has come up every time there is a discussion on tax deeded properties, it is the perfect time for the council to fully understand the process.

The council, on the advice of a previous attorney, has declined to seize the former mill building for back taxes because the extent, origin and cost of cleanup of the contamination have never been fully determined. If the city were to take possession of the property, it would be responsible for the cleanup costs.

According to City Council minutes from June 2017, former city attorney Jane Taylor said the Department of Environmental Services file shows there are monitoring wells on the property.

Additionally, Taylor said, there are city code issues in the building and the city doesn’t want to be a landlord.

“With all those things put together, the recommendation is for the city to refuse the tax deed,” Taylor said.

Back taxes at the time were more than $140,000, said McNutt, the city manager, according to the minutes, of which $68,000 were through 2013.

“Mr. McNutt said the property owners are working to remediate issues with the building and there are paying tenants in there, so he thinks it is in the best interest of the City to keep them in there and working toward the cleanup,” the minutes read.

In May of this year, Credere Associates of Maine completed a 505-page report for the Upper Valley Lake Sunapee Regional Planning Commission, with funding from the brownfields site assessment program.

Credere’s recommendations on the Topstone property include continued groundwater monitoring, further assessment of the extent of chlorinated volatile organic compounds offsite to the east, southeast, and south (of the property), further evaluation of a potential source, further defining of the groundwater management zone and a more comprehensive vapor intrusion investigation of the site.